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Daily FX Report
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The markets could stay turbulent and the investors focus will be on bank news and the result of the US rescue plan
Mon, Sep 22 2008, 08:40 GMT
by Varengold Bank Research Team
Varengold Wertpapierhandelsbank AG
Good morning from wonderful Hamburg. After the last exciting and very volatile week, we would expect no slow-down for this week. In spite of few economic data, the markets could stay turbulent and the investors focus will be on bank news and the result of the US rescue plan.
Market review
The JPY fell on Friday against a basket of currencies as US Treasury Secretary Henry Paulson pushed the government to spend money to deal with toxic mortgage assets. This developemnt pressured the JPY, because many funds flowed into the market after the collapse of Lehman Brothers and AIG insolvency fear last week. The picture has changed dramatically after the news about the financial markets rescue plan came up. If the appetite for risky trades rises, the JPY will be the biggest looser said a trader. The USD/JPY rose 1.7 % to 108.06. That was the worst one-day drop in over five month from the perspective of the JPY. Even the JPY crashed against the EUR by 2.8 %.
On Sunday the Bush administration and the Congress talked about an unprecedented $700 billion bank bailout to prevent further financial market turmoil. The plan will give power to the US Treasury to buy mortgage-related debt from financial firms, including US subsidiaries of foreign banks. The main goal is to avert, that the US economy slides into a deep and damaging recession. Democratic leaders in Congress promised quick actions, but also want to throw a lifeline to homeowners, not just to the Wall Street. As a result the EUR/USD rose on Friday 1.7 % and it was last up to 0.5% at 1.4555.
Additionally central banks in the US, Europe and Japan will consider taking foreign-dominated assets as collateral in an effort to provide liquidity for the financial markets. Currently most central banks only accept assets dominated in their currency as collateral. If they change the guidelines, cash-strapped firms will get funds easier.
GBP/USD
In the middle of September, the GBP/USD reached a 2 ½ year low at 1.7446. The subsequent recovery has become an upward trend channel. Inside the channel the GBP trades in a zigzag movement and is now on the upper line again. If the currency pair doesn’t cross the level, we will expect a rebound to the lower trend channel line.
AUD/USD
Since the beginning of July, the AUD/USD has been trading in a downward trend channel. On Friday the AUD jumped up and crossed the upper line of the channel. Compared to previous candle movements the last gain is the largest since five months. In addition to a clear trend break, the currency pair crosses the median of the Bolinger Bands.
Published on Mon, Sep 22 2008, 08:51 GMT
Archive
- The USD climbed to 90.62 versus the JPY
Published On Fri, Nov 6 2009, 11:08 GMT - The USD and the JPY climbed versus the EUR
Published On Thu, Nov 5 2009, 11:21 GMT - The GBP reached 0.8953 versus the EUR
Published On Wed, Nov 4 2009, 10:18 GMT - The USD gained against the JPY and reached 90.33
Published On Tue, Nov 3 2009, 10:25 GMT - The JPY increased to 80.80 against the AUD and even touched 79.47
Published On Mon, Nov 2 2009, 10:04 GMT
Varengold Wertpapierhandelsbank AG
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